The dollar is catching up with the euro, something I haven’t seen in 20 years

The euro has fallen nearly 10% so far in 2022 compared to the dollarwhich is very close to parity with the US currency, something we haven’t seen since 2002. The European currency is trading this Friday at $1.01.

The weakness of the Euro is mainly due to the recession fears that are increasing every day due to the decrease in Russian gas supplies to Germany.

The market is eager for a potential total cut, and the Ministry of Environmental Transformation has recognized that “maximum stress” may occur in the coming weeks. This situation, according to analysts, would cause an increase in the cost of energy and thus the risk of an economic recession.

For its part, the dollar was boosted by higher interest rates applied by the Federal Reserve (Fed) in the US, while the European Central Bank (ECB) has not yet raised interest rates. thusInvestors prefer to put the dollar in the US and this causes the euro to approach parity against the dollar.

The dollar’s strength is being felt globally, and local currencies in many developed countries have been losing ground since mid-June. According to Bloomberg, Among the strong economies that have devalued are the Russian ruble (-13.45%) and the South Korean won (-0.59%).

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